Stephen Castellano's  Instablog

Stephen Castellano
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J. Stephen Castellano founded the investment research and strategy consulting firm Ascendere Associates in 2009, building upon a diversified 20-year career in sell side and buy side equity research. His roles included coverage of the steel industry at PaineWebber and telecom services at Warburg... More
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Ascendere Associates LLC
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J Stephen Castellano
  • Ascendere Associates Jumps Out of Cash into Stocks 2 Days Prior to Yuan-Driven Rally 0 comments
    Jun 21, 2010 9:42 AM | about stocks: SPY, DWA

    Extremely busy preparing for a June 30 launch of a paid newsletter.  

    Meanwhile, would just point out that we continue to make prescient calls in market timing.  We are not focused on market timing, but we find it convenient to let technical indicators to influence our long/short/cash weightings of "high-quality" and "low-quality" baskets of stocks.

    So many hubristic pundits have been pulling out their hair lately, calling anyone buying over the last few days idiots because they could not understand why anyone would buy after a big rally, especially amidst a number of recently dismal key economic indicators.  

    Sticking to our models -- which helped us get long at the end of February and get short on May 6 and into cash on May 7 -- we went long on June 17 in our model portfolios and a real-money account, which follows an unleveraged long-stock and long-inverse-ETF strategy.  

    Trying to make a big call on economic drivers is making fools out of a lot of people. Meanwhile, it is the systematic models that continue to make the bucks.  Our indicators are not perfect or magical and tend to lag key turning points by a few days, but they do tend to work at capturing trends, and the same signals will get us out of any rally if it turns the other way.  

    Separately, would point out that we highlighted Dreamworks (NASDAQ:DWA) as one of the ugliest stocks in the model short portfolio a few weeks ago on May 24.  Goldman Sachs downgraded the stock on June 16 to a Neutral rating with a $35 target.  Based on anecdotal observation, our models seem particularly good at presaging a number of Goldman upgrades and downgrades, as we detail in our Nostradamus report published back in March.

    A monthly and weekly newsletter will be made available soon, with daily alerts when necessary.  Interested readers can contact us now -- we are considering applying a discount on the first issue to any readers that express their interest early.   

    Disclosure: None
    Stocks: SPY, DWA
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